Preview

J Sainsbury - Financial Performance of Last 5 Years Essay Example

Powerful Essays
Open Document
Open Document
2974 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
J Sainsbury - Financial Performance of Last 5 Years Essay Example
1. EXECUTIVE SUMMARY

J Sainsbury plc is a UK based company, into grocery, related retailing an financial services business. The study is primarily to do financial assessment of this company and its performance relative to its peers and industry. Seeing the last 5 years report, it is evident that company was in a bad share 3 years ago, and now its in the stage of recovery.
Starting 2004, there has been a major change in the board, as well as management. Since then company has taken several large and aggressive approach. This can be summarised as renovating/ ex-panding retail space, re-engineering of supply chain, and improvement in IT system. Also there has been focus on brand repositioning through quality improvement, cost reduction through increasing volume, etc. This has resulted into good numbers for its sales and profit margin. The first thing the new CEO Justin King did was to reduce price by 5% in most of the items, so that they re-gain custom-ers confidence.
If we see from a year’s perspective, company is highly squeezed in terms of cash flow, very less net profit margin compared to industry. They have a high pressure on improving their margins. Comparing them with their peers Tesco, Wm Morrison, and others, we found that Tesco is obviously market leader, so have a very high profit margin. If compare with the closest competitor Wm Morri-son, even though they relatively smaller in size of business, but they have much better profit margin and revenue per sq ft, with less number of stores.
In terms of investors point of view also they have tried to compensate it with higher dividend of 9.75p compared to last years’ 8p. They have also ensured to keep the dividend cover to 1.5. Ana-lysts and investors are not very upbeat about this stock, seeing the bad performance in last 3 years and would be very conscious in investing.
Seeing the last year’s growth pattern and the achievement of some of the set targets (sales, cost cutting, quality growth) one should

You May Also Find These Documents Helpful

  • Good Essays

    Ll Bean

    • 1053 Words
    • 5 Pages

    Currently, the business is acquiring greater sales due to its customer acquisition program combined with other marketing efforts (i.e. increase in catalogue circulation, more advertisements). As well, the company is utilizing new technologies to improve its inventory system, its data processing programs, and its order system. This allows the company to provide customers with accurate and efficient services. Furthermore, the company provides its employees with many attractive benefits,…

    • 1053 Words
    • 5 Pages
    Good Essays
  • Good Essays

    I would recommend the company identify all different segments of its business model to identify the segments which are the most profitable, and the segments which are continuing to suffer losses every year. Once this analysis is done, the company can devote more time and resources to the segments which have a brighter future for the company. The company faces continued pressure from economic events drilling down to tightening margins, I would recommend the company continue to seek and search for the next profitable business opportunity while reducing its capital expenditures and operational expenditures as necessary. Also,…

    • 659 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Allen Case

    • 1087 Words
    • 5 Pages

    Growth Rate: While having big margins, the Management needs few changes. It could a have a constant positive growth.…

    • 1087 Words
    • 5 Pages
    Good Essays
  • Good Essays

    | -Substantial investment into new stores, during recession and reduced consumer spending (*)-Extremely low profit margins, yet partners still received a 14% bonus, with a figure higher than net profit.-Liquidity is certainly a concern for JL, with a current ratio of 77% and gearing of over 25% - holds financial risk-JLP have pursued an aggressive expansion strategy in order to take advantage of their strong position, prior to any ‘boom’ or exit from the recession-Despite the risk, equity outweighs debt and now places them in a competitive position for the future-High partner bonuses mitigate the extent to which low margins create stakeholder concerns – after all, bonuses replace dividends in JLP-Significant gearing creates short term risk, however, essential due to the long lead time from store authorisation, to store completion…

    • 1754 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    Initial Assessment: An initial look at the ratio analysis reveals that the annual sales-growth rate has been holding around 15%. This is perhaps the only good news from the analysis. A performance discontinuity makes its appearance in FY 2000 as a drop in operating margin. This was a result of a 21% increase in production costs and expenses and a 20% increase in admin and selling expenses. There was also an inexplicable 95% increase in inventory. This jump in inventory and operating expenses appears to have been financed through debt, as the debt/equity and debt/total capital ratios increased during this period. Since the sales growth rate has held steady, there has been…

    • 2335 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    Case Study Questions

    • 1261 Words
    • 6 Pages

    What actions do you think management at BJ’s Wholesale should take to boost revenue growth and overall financial performance?…

    • 1261 Words
    • 6 Pages
    Good Essays
  • Powerful Essays

    Herman Miller

    • 1138 Words
    • 5 Pages

    -They focus more on high quality products that is why they were not dramatically hit by competition from overseas, also because they were already in some of these markets. They’re manufacturing strategy limited fixed production costs by outsourcing component parts from strategic suppliers, which increased variable nature of its cost structure, which is their competitive advantage, which is reflected in their financial performance, from 2006-2010 their gross profit margin remained relatively constant.…

    • 1138 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    J&S had been performing well from the start even though there is a fall in profits in some months. It is company's view that this is due to well trained staff and good customer service given and also company is enjoying purchasing economies of scale due to bulk buying.…

    • 1597 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    An annual report is a portrait of the business of a firm. In fact, it is the most important way for a company to disclose information to the public (Dainelli et al., 2013). Such information includes both financial and non-financial information, which might be quite useful for investors and potential investors of the company to make their decisions. Wm Morrison Supermarkets Plc (abbreviated as “Morrisons” below) is “the UK’s fourth largest food retailer by sale” (Morrisons, 2013). This report will use Morrisons as an example to make a critical evaluation of corporate annual report. There will be mainly four parts in this report. First of all, an overview of the annual report of Morrisons will be provided. On this basis, the second part will critically assess the section of “Performance and Strategy Review” of the annual report of Morrisons. The third part asses the section of “Governance”. Then, the fourth part will evaluate the reliability of the annual report of Morrisons. Finally, a conclusion will be given.…

    • 1867 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Tesco Analysis

    • 2602 Words
    • 11 Pages

    According to the profitability ratio, ROCE for Tesco has decreased from 14.04% to 11.45% within on year. Compared with Sainsbury whose ROCE had increased 2.36%; Tesco seems had less management efficiency than Sainsbury. However, this is mainly due to the big increase of capital employed compared with the small increase of net profit. The capital employed of Tesco has increased 40.8% accompanied with a decrease of 4.7% for Sainsbury, and for net profit, both companies did not have too much digital difference. This increase of capital employed for Tesco is mainly due to the increase amount of property, plant and equipment, because of Tesco’s long-term strategy including international market, which may need more plants and equipments for the expansion of international market but maybe unfortunately, it didn’t utilize assets in 2009 as well as that in 2008. For return on shareholders’ funds, Tesco decreased 1.23% within one year. Profit for this financial year is slightly larger than last year, but there is much more equity shareholders funds than last…

    • 2602 Words
    • 11 Pages
    Good Essays
  • Good Essays

    J Sainsbury plc is a leading food retailer in the United Kingdom. J Sainsbury plc was founded in 1869 and today operates a total of 934 stores comprising 557 supermarkets and 377 convenience stores. It jointly owns Sainsbury’s Bank with Lloyds Banking Group and has two property joint ventures with Land Securities Group PLC and The British Land Company PLC.…

    • 5190 Words
    • 21 Pages
    Good Essays
  • Powerful Essays

    Tesco Financial Analysis

    • 5873 Words
    • 24 Pages

    This report aims to analyze the financial position of TESCO PLC from the point of view an investor who seeks to evaluate the prospects of buying shares of a company in food and retailing sector. The potential investor has selected TESCO PLC and has asked the author to analyze the investment prospects and present a report on the same.…

    • 5873 Words
    • 24 Pages
    Powerful Essays
  • Powerful Essays

    Tesco vs Sainsburys

    • 5629 Words
    • 23 Pages

    So the main theme of this research and analysis is to discuss, analyze and conclude the financial situation of Tesco Plc. The reason for choosing Tesco as a target company for this research and analysis project is because of its rapid growth in the retail industry, increasing revenue and structure, and profitability of the company. In third world countries the use of IT has not reached its peak yet. In countries like Pakistan the use of IT has just been put into function some years ago in business sectors like retail and banking etc.…

    • 5629 Words
    • 23 Pages
    Powerful Essays
  • Good Essays

    Change Management in M&S

    • 454 Words
    • 2 Pages

    “In the last two years, the Group has undergone a period of significant and necessary change under Stuart Rose’s able and inspiring leadership. From day one, it was clear he knew the issues that needed to be addressed. He drew up a plan, assembled the team to implement the plan, and then got on with it, in a tireless and focused manner. The improvements seen in 2005/06, a direct result of this approach, have been reflected in our share price and a two-thirds increase in earnings per share to 31.4p per share (last year 19.2p), a record level for the Group. On the strength of this, we are proposing a final dividend of 9.2p per share (last year 7.5p), providing a total dividend for the year of 14.0p (last year 12.1p), an increase of 15.7%. With dividend cover now restored to over two times, the Board’s future policy is to grow dividends broadly in line with adjusted earnings per share growth for each half of the financial year (1).…

    • 454 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Ratio analysis

    • 897 Words
    • 4 Pages

    The gross profit margin of both companies is mostly affected by global economic recession but Tesco is doing quite well. Sainsbury find itself in difficult probably due to high…

    • 897 Words
    • 4 Pages
    Powerful Essays